Dabur Q1 net profit up 10% on strong sales in home care, shampoo segment

Moneylife Digital Team 24 July 2013

On back of strong growth across categories, Dabur, the fast moving consumer good company posted good numbers in June quarter despite high inflation and reduced discretionary spending

Dabur, which is part of Moneylife’s Stockletter pick, has posted a net profit of Rs130.89 crore for the quarter ended 30 June 2013 compared with Rs1,18.92 crore, up 10% while its total revenues, including sales increased to Rs1,126 crore from Rs1,017 crore same period a year ago. The positive results were driven by strong growth in key categories like hair care, oral care, foods, home care and skin care. We had recommended this stock at Rs153 and the share price is currently quoting at Rs175 on the Bombay Stock Exchange (BSE).

According to Moneylife data, Dabur commands a premium valuation, with its market capitalisation quoting at a whopping 45 times its operating profit. Its return on net worth stood at an impressive 39%.

“Despite signs of an economic downturn and increased competitive intensity in the market, Dabur India has reported strong volume growth in its key categories. Our domestic FMCG business grew at a strong 13.2%, driven by a volume growth of 9%. The business has performed well on all operating parameters. We have managed our business dynamically through a combination of calibrated price increases and greater focus on cost efficiencies. The macro-economic pressures notwithstanding, we remain on course to strengthen our brand portfolio and improve our competitiveness in the market place,” Dabur India Ltd chief executive officer Sunil Duggal said.

Dabur’s home care business grew by around 26%, while the foods business, led by packaged fruit juice brands Real and Real Activ, continued to report strong growth and ended the first quarter up 18.7%. The shampoo category continued to move forward on the strong growth trajectory and ended the quarter with a near 23% growth. This, coupled with the over 15% growth in our perfumed hair oil business, helped the hair care category report strong gains during the first quarter. The oral care category also performed well with the Toothpaste business reporting a 14% growth, while the digestives business grew by 15% and the skin care business reported a near 13% growth. Dabur’s retail business, under NewU, has also marked a turnaround with a substantial reduction in losses and the business has attained store-level profitability.

During the first quarter of 2013-14, Dabur launched a host of new products and variants across geographies, all of which have received encouraging response. In the domestic market, Dabur has launched India’s first drinking yoghurt under the brand Real Activ, besides a range of super-fruit juices under the brand Real Supafruits. The quarter also saw the launch of India’s first gel- based facial bleach under the brand OxyLife. In the overseas market, Dabur launched a range of hair care products – like hair mayonnaise, shampoos, conditioner, hair oils and hair colour crème -- under the brand Vatika, besides a range of Fem hair removal wax.

Dabur ended Wednesday 2.4% up at Rs174.95 on the BSE, while the 30-share index ended 1% down at 20,090.

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